The Aam Aadmi Party’s politics with power can bankrupt the sector

The bid to play politics and short circuit path-breaking power sector reforms in Delhi needs to be scuttled with transparency and facts. Aam Aadmi Party's Arvind Kejriwal has alleged that Delhi's power distribution companies, or discoms, are fudging accounts to show artificial losses. He claims that the Delhi Electricity Regulatory Commission (DERC) headed by P D Sudhakar has, quite needlessly, allowed jacking up of power tariffs in the last two years. And the demand now is to implement the tariff 'order' passed by former DERC chief Berjinder Singh, which had sought to bring down tariffs by 23% in 2010 and further, to slash current tariffs by half. The plain fact is that regulatory diktat — in a reckless bid to shore up populism — kept tariffs unrevised for six years, until they were raised 22% in 2011 and 32% in 2012. The fact is that while bulk power tariffs for the discoms have risen 300% in the last decade, retail tariffs have gone up 65%. The notion that tariffs need to keep declining, never mind growing costs of power purchase and rising inflation, betrays a bankrupt mindset. Instead, we need competitive power tariffs to boost quality supply, rev up investment and put paid to everyday shortages, including in rural areas. Such a forward-looking tariff policy would be hugely transformative and we need vision and political consensus to follow through with the reforms. Besides, the Delhi High Court has since held that the 2010 tariff 'order' was not valid as a majority of the DERC members disagreed, and it remained a noting on the files. The fact is that 80% of the costs of discoms involve power purchase at regulated rates from NTPC, NHPC, etc, financing costs add up to another 10% and the rest involve operations and maintenance expenses. Other allegations have been made, but we need to rely on facts.

The bottom line is that there has been huge, nearly 40 percentage points, reduction in technical and commercial power losses in Delhi, unprecedented nationally. The number of consumers billed has gone up from 18 lakh to 32 lakh, and since the discoms are JVs with the Delhi government, the exchequer has saved .`30,000 crore in giveaways. Populist politics in power needs to be junked.